- Britain's financial watchdog examining pure protection insurance
- Shares fell 2.8% as SunLife news overshadowed strong results
- Phoenix's H1 cash generation and profit surpassed expectations
Sept 16 (Reuters) - British insurer Phoenix Group has stopped the sale process of its SunLife business, it said on Monday, citing regulatory scrutiny into what is known as the pure protection insurance market, sending its shares lower.
Phoenix's pure protection products are designed to help policyholders manage their finances if they become unable to meet financial commitments. It distributes them through the SunLife brand, which earns commission.
Britain's financial watchdog in August launched a market study into sales of pure protection insurance products following concern the design of some commission structures could lead to poor outcomes for policyholders.
"The uncertainty around commission was a concern for potential purchasers," CEO Andy Briggs told Reuters.
A sale of the SunLife brand would have split the manufacturing and the distribution of the products, Briggs said, raising concerns about lower commissions to SunLife.
Shares fell 2.8% in early trade as the SunLife news overshadowed Phoenix's first-half earnings and total cash that surpassed market expectations on pensions and savings business growth.
Phoenix reported total cash generation of 950 million pounds ($1.25 billion) in the six months to June 30, surpassing expectations of about 739 million pounds in a company-compiled consensus.
The company, which specialises in buying up and managing books of life insurance business closed to new customers, said it was confident of delivering total cash at the top end of its previous target range of 1.4 billion to 1.5 billion pounds in 2024.
The insurer's half-yearly adjusted operating profit increased 15% to 360 million pounds, though analysts had forecast an earnings of about 348 million pounds.
Phoenix, which has been expanding into the bulk annuities market, said written annuity premiums were 1.7 billion pounds in the first half, down nearly 47% on last year.
Still, Briggs said he was positive for bulk annuity deals and that new players were starting to enter the market.
Bulk annuities, which have slowed this year after hitting record levels last year, are a form of insurance whereby a company's pension plan offloads liabilities to an insurer.
($1 = 0.7603 pounds)
Reporting by Yadarisa Shabong in Bengaluru; Editing by Sherry Jacob-Phillips and Barbara Lewis
Source: Reuters